Benchmark BSE Sensex and Nifty recovered after two sessions of heavy selling and closed higher in a highly volatile trade on Monday, but bloodbath continued on most of the Adani group counters and its scripts fell for the third day running on.
The market which remained in the negative territory throughout the day staged sharp recovery thanks to brisk buying in IT, oil and financial stocks.
Shares of Adani group firms have faced heavy drubbing since Tuesday’s close last week, after US-based short seller Hindenburg Research made damaging allegations against the conglomerate.
Howerver, Adani’s embattled group clutched on to a USD 400-million investment by Abu Dhabi’s International Holding Co in its flagship firm’s share sale to restore confidence in the conglomerate.
The 30-share Sensex recovered 169.51 points or 0.29 per cent to settle at 59,500.41 as 17 of its constituents ended in the green. During the day, it rose by 313.34 points or 0.52 per cent to 59,644.24.
The broader NSE Nifty gained 44.60 points or 0.25 per cent to end at 17,648.95 as 29 of its stocks advanced. The index moved in a range of 17,709.15 to 17,405.55 during the day. Shares of Adani group firms closed on a mixed note with flagship Adani Enterprises climbing 4.21 per cent.
However, Adani Transmission dropped 14.91 per cent, Adani Green by 20 per cent, Adani Total Gas by 20 per cent, Adani Power by 5 per cent, and Adani Wilmar by 5 per cent, a day after the group released a 413-page response to allegations of wrongdoing brought by a US-based short seller Hindenburg Research.
Since Tuesday’s close last week, shares of Adani Total Gas tanked 39.57 per cent, Adani Transmission tumbled 37.95 per cent, Adani Green Energy declined 37.93 per cent, Ambuja Cements went lower by 22.28 per cent and Adani Ports fell 21.55 per cent on the BSE.
In three days, shares of Adani-owned ACC tanked 18.47 per cent, Adani Enterprises fell 16.38 per cent, Adani Wilmar dipped 14.25 per cent, Adani Power (14.24 per cent) and NDTV (14.22 per cent). The group firms have collectively lost over Rs 5.56 lakh crore in market valuation between January 24 and 30.
On Friday, the Adani group stocks fell up to 20 per cent after Hindenburg Research made damaging allegations. Banking counters and Life Insurance Corporation of India (LIC) have also faced the heat amid concerns over their exposure to the Adani group firms.
In three days, shares of Bank of Baroda declined 10.93 per cent, State Bank of India fell 9.42 per cent and Life Insurance Corporation tanked 6.52 per cent.
The Hindenburg Research report came two days before Adani Enterprises’ Rs 20,000 crore Follow on Public Offer (FPO) that opened for subscription on January 27.
Meanwhile, Hindenburg Research has rejected Adani Group’s charge that its report was an attack on India, saying a “fraud” cannot be obfuscated by nationalism or a bloated response that ignored response to key allegations.
Commenting on the 413-page reply that Adani Group released late on Sunday evening in response to its report, Hindenburg said it believed India was a vibrant democracy and an emerging superpower with an exciting future and it was Adani Group which was holding it back through “systematic loot”.
Hindenburg stood by its last week’s report that said its two-year investigation found Adani Group “engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades”.
“The response by Adani had a mixed effect on the stock group and market. The saga is likely to continue as a hanging risk in the minds of the investors in the medium-term. Now the focus of the market will be on Budget and Fed policy,” Vinod Nair, Head of Research at Geojit Financial Services, told news agency PTI.
“Volatility continued to be the order of the day, as benchmark Sensex gyrated nearly 1000 points intra-day before staging a smart comeback in late trades on selective buying. Two big events, the interest rate decision by the US Federal Reserve and the Union Budget are keeping investors nervous,” said Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd.
Among Sensex stocks, Bajaj Finance rose the most by 4.61 per cent on positive quarterly results. Ultratech Cement rose by 2.51 per cent, Bajaj Finserv by 2.22 per cent and NTPC by 1.53 per cent.
IT stocks also recovered with HCL Tech rising by 1.85 per cent, Infosys by 1.37 per cent and TCS by 0.72 per cent. Reliance Industries, Maruti, Wipro, M&M, Kotak Bank, Sun Pharma, ICICI Bank also gained.
Among losers, Power Grid fell the most by 3.38 per cent, IndusInd Bank by 2.56 per cent, L&T by 2.11 per cent, Tata Steel by 1.62 per cent, HUL by 1.55 per cent and Tata Motors by 0.45 per cent.
State Bank of India and HDFC were also among the laggards.
In the broader market, the BSE midcap gauge dipped 0.22 per cent and smallcap index fell 0.10 per cent.
Among sectoral indices, utilities slumped 5.74 per cent, power declined 5.30 per cent, oil & gas (4.06 per cent), energy (3.12 per cent), capital goods (1.30 per cent) and metal (1.19 per cent).
IT, consumer durables, telecommunication, consumer discretionary and commodities were the winners.
Elsewhere in Asia, equity markets in Seoul and Hong Kong ended lower, while Tokyo and Shanghai settled in the green.
European markets were trading lower during mid-session deals. Markets in the US had ended higher on Friday.